Mortgage Rates Little Changed Near 4-Month Lows

Mortgage rates held steady for the most part on Thursday, keeping them in line with 4 Month Lows (a milestone reached last Friday).  There were slight variations in closing costs between lenders, with some moving either higher or lower from yesterday, but not even remotely enough to change the prevailing rates.  As such, the most prevalent conforming 30yr fixed rate (best-execution) remains at 4.125% for the best qualified buyers.

Despite an increase in the amount of economic data, activity was quite light in Bond markets, which include the mortgage-backed-securities (MBS) that most directly influence mortgage rates.  Trading levels stuck to their recent ranges, but did follow movement in equities markets to some extent. 

In general, the more significant pieces of data coming up in the next two weeks are keeping movement subdued.  We saw the same phenomenon ahead of the most recent jobs report, but we also saw how potent enough surprises can affect the stability.  It makes sense to be ready to act quickly in terms of locking a rate.

Loan Originator Perspectives

"After a few nice days, we did have a small pull back today which wasn't unexpected. Quite often when rates rally too far too fast, you get a small pull back as profits are booked. I do continue to believe we are in a downtrend with rates, so I favor floating everything overnight as I suspect we will get these loses back tomorrow." -Victor Burek, Open Mortgage

"Extremely boring day for interest rates, but boring is GOOD! The less volatility the better. Range is tight, right now between 2.47-2.50, lookout for 2.55 if we break above 2.50. Floating is safe, especially on boring days. Closing within 7-10 days should lock." -Constantine Floropoulos, Quontic Bank

"Relative day of rest in MBS Land today as prices barely budged. Rates still at levels not seen since June, folks who got rate quotes in July and August (and passed on loans due to rate) may want to call and check current pricing. Floating borrowers need to examine their goals and decide when they want to lock up recent gains." -Ted Rood, Senior Originator, Wintrust Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.125%
  
• FHA/VA - 3.75-4.4%
  
• 15 YEAR FIXED -  3.375%
  
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• Uncertainty over the Fed's bond-buying plans and more recently over Fiscal Policy has been making for a tough interest rate environment.
• A lack of data due to the government shutdown caused rates to experience moments of paralysis while headlines suggesting the shutdown might/might-not end, as well as a seizing-up of short term funding markets caused unexpectedly high volatility--enough to be felt in longer term rates like mortgages.
• After a deal was reached to avoid going over the debt ceiling, funding markets thawed and rates returned to the same 'wait and see' range that existed before the Fiscal drama. 
  
• Markets continue to be most interested in economic data and it's suggestions about the longer term trajectory of the economy.  This will shape expectations for Fed policy in the coming months, and thus inform the direction of interest rates.
• The stronger the data the more likely the Fed is seen as reducing asset purchases.  Rates would rise under this scenario, but the most recent FOMC Meeting (and more importantly, the Fed's decision to hold off on tapering) suggests that they'll attempt to keep the pace of rising rates moderate as long as inflation isn't adversely affected.  The delayed release of the September jobs numbers on October 22nd helps confirm that.
  
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).